Andre Yoskowitz
8 Jul 2009 15:21
Internet Radio has been saved today, for the time being at least, after SoundExchange signed a deal with radio webcasters.
SoundExchange is the organization in charge of collecting royalties for musicians and the record labels relating to online music.
The deal, settled after 2 1/2 years of very public disputes over proposed royalty increases, will allow Internet Radio to survive. Webcasters will not be forced to pay per-song royalty payments that many webcasters claimed would put them out of business.
According to the LATimes, webcasters can now "choose an alternative rate structure that allows them to pay lower per-song royalties through 2015, or 25% of their revenue."
"If the rates weren't resolved, we were sunk. So this is a huge relief," adds Tim Westergren, founder of Pandora. Westergren adds that Pandora, through its site and iPhone App, has about 30 million registered users.
The company expects to have $40 million USD in revenue for 2009, and could possibly now be profitable next year.
The new royalty deal will start at a per-song rate of 0.08 of a cent per listener per song and will rise to .14 of a cent by 2015. The proposed rates had been .0762 for the first year, and then .19 of a cent for 2010, a gigantic increase.
The LATimes adds that "under the new agreement, large webcasters pay whichever is greater -- the per-song fee or the percentage of revenue. Smaller commercial webcasters -- those with $1.25 million or less in total revenue -- would pay between 10% and 14% of their sales or 7% of their expenses, whichever is greater."
"It's a substantial reduction in the per-song streaming fee, and that was really the crux of the problem for us," notes Westergren.